WHAT WE DON'T KNOW CAN HURT US.

To drill in the role uncertainty is playing the Big Shitpile, check out this Robert Samuelson bit on Bear Stearns:

Whether Bear Stearns was the victim of unfounded rumor or of genuine rot in its securities portfolio is unclear. But that very uncertainty defines the nature of the modern financial crisis—and the difficulties facing the Fed in trying to contain it. Financial institutions (banks, investment banks, hedge funds and others) are interconnected through networks of buying, selling, borrowing and lending. These require confidence that commitments made will be commitments honored. If that confidence collapses, the process of extending credit for the economy and of trading—for stocks, bonds, foreign exchange—may also collapse.

Yep, one of the working theories about the fall of Bear Stearns is that some hedge funds started a rumor so they could short the stock. Normally, that might lead the stock to dip a bit as folks checked out whether the rumor was true. But no one trusts their ability to verify anyone's risk load right now. So Bear Stearns -- the fifth largest investment bank in America -- got taken apart over a weekend.

The other day, Paul Krugman said, "We are, in effect, suffering from a giant bank run, albeit on financial institutions that aren’t called banks — and aren’t regulated like banks." A bank run is a crisis of confidence in a bank that leads all the bank's customers to rush up and demand their money at once. The way to stop a bank run is to allay whatever fears are degrading confidence. The fun thing about this crisis is that no one knows that the underlying realities are, so fears can't be allayed, and the worst is constantly being assumed. Without effective regulation, oversight, or transparency, there's no broadly accepted set of numbers investors can use to make decisions. And so every time there's a hint of trouble, they all run, not wanting to be the fools left holding the bag when the numbers eventually do come in. Fundamentally, this crisis is proving one thing: In finance, what we don't know can hurt us.